EMPLOYMENT AGREEMENT
This Agreement is made effective as of January 29, 1999, by and between Xxxxxxx
X. Xxxxx ("Employee") and INTELLICELL, CORP., a Delaware corporation ("Employer"
or the "Company")
RECITALS
A. Employer desires to employ Employee as its Executive Vice President -
General Manager and to be assured of his services as such on the terms and
conditions hereinafter set forth.
C. Employee is willing to accept employment in the above-described capacity on
such terms and conditions.
For all the reasons set forth above, and in consideration of the mutual
covenants and promises of the parties, and intending to be legally bound hereby,
Employer and Employee agree as follows:
Section I
Employment
Employee shall perform the duties and responsibilities of Executive Vice
President - General Manager, reporting directly to the President and CEO.
Such duties and responsibilities shall be reasonably related to Employee's
position. Employee shall devote all of his business time, attention,
knowledge and skills faithfully, diligently and to the best of his ability,
in furtherance of the business and activities of the Company and may not,
directly or indirectly, in any capacity, do any work for or on behalf of
himself exclusively, or any other company, person or entity, irrespective of
whether or not same is in a competing business. Employee is considered
employed under the applicable law in which the Employee is employed. The
principal place of performance by Employee of his duties hereunder shall be
in or near Dallas, Texas or such other place as the Company's Board of
Directors (the "Board") shall determine, although Employee may be required to
travel outside of the metro Dallas area where his office is located in
connection with the business of the Company.
Section II
Term of Employment
The term of employment shall be three years commencing as February 8, 1999
(the "Effective Date") (such period being referred to as the "Initial Term" and
any year commencing on the Effective Date or any anniversary of the Effective
Date being hereinafter referred to as an "Employment Year").
Section III
Compensation
Employer shall pay employee a monthly salary ("Salary") of Twelve Thousand
five hundred Dollars ($12,500.00), payable twice monthly, on the 15th and 30th
days of each month (pro-rated, as applicable)(the "paydate") or at such other
times as may mutually be agreed upon between Employer and Employee. In
addition, Employer shall pay employee a one-time signing bonus of $36,000
payable on the first Paydate after commencement of employment.
Subject to formal Board approval, Employer shall grant Incentive Options
to purchase 100,000 shares of common stock of the Company, under the Employer's
1998 or 1996 Stock Option Plans. The five year options are granted with an
exercise price equal to the fair market value of the Company's common stock on
the date of grant. These options will vest as to $100,000 of excercisable value
(number of shares x cash exercise price) December 31, 1999, December 31, 2000
and December 31, 2001 with any remaining options vesting on February 8, 2002
pending continued employment with Employer.
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Subject to formal Board approval and at the sole discretion of the Board,
Employee may, from time to time receive bonuses based on performance of the
Employee and the earnings of the Employer. Said bonuses will be paid in either
cash or stock options.
As further incentive for the Employee, Employer agrees to provide the
financial arrangements for the Employee to exercise vested options to purchase
72,000 shares of Cellstar Corp. shares at an exercise price of $6.95 per share.
Said arrangements to include, but not be limited to finding a willing stock
broker to provide a margin loan to the Employee. The difference between the
margin loan and the exercise price would be either funded by the Employer as an
interest free loan to the Employee or the Employer would make other arrangements
on terms no less favorable. Employee hereby agrees to provide Employer a
security interest in the 72,000 shares of Cellstar Corp. shares and to repay any
loans made from the first sales of these shares or by February 28, 2000;
whichever occurs earlier. If any loans made by Employer to Employee have not
been repaid by February 28, 2000. Employer may offset in full, all amounts so
owed from any salary, bonuses reimbursements or other amounts owed by Employer
to Employee.
Section IV
Benefits
(a) During the term of this Agreement, Employee shall have the right to
receive or participate in all benefits and plans which the Company may from
time to time institute during such period for its employees and for which
Employee is eligible. Nothing paid to Employee under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of salary or any other obligation payable to Employee pursuant to this
Agreement.
(b) During the term of this Agreement Employee shall be entitled to the
number of paid holidays, personal days off and sick leave days in each calendar
year as are determined by the Company from time to time. Employee shall be
entitled to two weeks of vacation during his first year of employment and two
weeks per year for each year thereafter. Such vacation shall be taken in
Employee's discretion with the prior approval of Employer, and at such times as
are not inconsistent with the reasonable business needs of the Company.
Section V
Travel and Other Expenses
All travel and other expenses incidental to the rendering of services
reasonably incurred on behalf of the Company by Employee during the term of this
Agreement shall be paid by Employer. If any such expenses are paid in the first
instance by Employee, Employer shall reimburse him therefor within a reasonable
time of presentation of appropriate receipts for such expenses.
If the Employer requests the Employee to relocate, the Employer agrees to
pay reasonable costs. Employer and Employee agree to a maximum limit of said
costs before the move is consummated. Furthermore, Employer agrees that a
dispute over the amount of reasonable costs shall not constitute cause as
defined in Section VI of this Agreement.
Section VI
Termination
(a) Notwithstanding anything in this Agreement to the contrary, Employer
shall have the right to discharge Employee, for cause in the event: (i)
Employee shall be unable to perform his full duties pursuant to this Agreement
to the satisfaction of Employer as a result of illness, disability, or other
incapacity for an aggregate period of 90 days or more during the term hereof; or
(ii) Employer shows Employee fails to competently perform his reasonable duties
assigned to him by Employer; or (iii) Employee shall commit a
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willful or intentional breach of his duties and obligations to Employer or
engage in any materially dishonest conduct in connection with the performance
of his duties under this Agreement; or (iv) Employee shall otherwise violate
any material provision of this Agreement; or (v) Employee shall be
adjudicated an incompetent; or (vi) Employee shall engage in criminal
misconduct (including, without limitation, embezzlement and criminal fraud);
or (vii) Employee shall be convicted of any felony; or (viii) Employee shall
have breached any warranty given under this Agreement. Upon discharge
pursuant to this Section, Employer shall have no further obligation or duties
to Employee other than payment of salary and reimbursement of expenses
through the effective date of termination of Employee.
(b) In the event that Employee's employment is terminated with cause, then
Employer shall have no further obligation or duties to Employee, other than for
payment of amounts as provided under Section V and VI and shall be entitled to
recover from Employee any costs or damages resulting from Employee's breach of
this Agreement. In the event of such termination without cause, after six
months from date of employment, Employer shall continue to pay Employee, at the
current Salary rate either, (i) for the remainder of the Initial Term or (ii)
for a further period of twelve months following termination, whichever is less.
In the event of such termination without cause, within six months from the date
of employment, Employer shall continue to pay Employee, at the current Salary
rate either (i) for the remainder of the Initial Term, or (ii) for a further
period of six months following termination, whichever is less.
c Notwithstanding the discharge of Employee pursuant to Sections 6(a)
and 6(b) above, Employee shall continue to be bound by the provisions of
Sections VII and VIII of this Agreement.
(d) In the event that there is a Change in Control (as hereinafter
defined), at the option of the Employee, which must be executed in writing ten
days following the Change in Control, this Agreement will be terminated and the
Employer and Employee shall have no further obligation or duties to each other,
except as provided in SECTION VII(a).
(e) For purposes of this Agreement a "CHANGE IN CONTROL" shall mean and be
determined to have occurred if (A) any person ("PERSON") (as such term is used
in Sections 13(b) and 14(b) of the Securities and Exchange Act of 1934, as
amended) (the "EXCHANGE ACT") is or becomes the beneficial owner ("BENEFICIAL
OWNER") (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing thirty five percent (35
%) or more of the combined voting power of the then outstanding securities of
the Company; (B) during any period of two (2) years, a majority of the members
of the Board is replaced by directors who were not nominated and approved by the
Board; or (C) the Company is combined with or acquired by another company and
the Board shall have determined, either before such event or thereafter, by
resolution, that a Change in Control will occur or has occurred.
Section VII
Non-Disclosure and Non-Competition
(a) Employer and Employee acknowledge that the services to be performed by
Employee under this Agreement are unique and extraordinary and, as a result of
such employment, Employee will come unto possession of confidential information
relating to the business and practices of the Company. The term "Confidential
Information" shall mean any and all information (verbal and written) relating to
the Company or any of its affiliates, or any of their respective activities,
other than such information which can be shown by Employer to not be in the
public domain (such information not being deemed to be in the public domain
merely because it is embraced by more general information which is in the public
domain) other than as a result of a breach of the provisions of this Section,
including, but limited to: trade secrets, research projects, personnel lists,
financial information, services used, pricing, customers, customer lists and
prospects, product sourcing, marketing and selling and servicing. Employee will
not at any time, either during or after the term of this Agreement, divulge any
Confidential Information to any other person, firm, or entity, nor use or permit
the use of any said Confidential Information, other than pursuant to employment
on behalf of Employer hereunder. Without limiting the generality of the
foregoing, upon the termination of employment hereunder for any reason, Employee
shall forthwith deliver to Employer all documents and other material in his
possession or under his
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control containing any Confidential Information and/or relating to the
business of Employer.
(b) It is understood and agreed by Employee that all business
relationships and goodwill now existing with respect to customers and suppliers
of Employer, whether or not created or served by Employee hereunder, and all
such relationships and goodwill which may hereafter become known to or be
created or enhanced by Employee in the course of employment hereunder,
constitute valuable proprietary rights and interests of Employer, and are, and
shall at all times remain, the sole property of, and shall inure to the sole
benefit of Employer. Accordingly, Employee agrees that during the term of
employment and for a further period of one year beginning on the date of
termination of Employment for any reason, Employee will not, as proprietor,
partner, joint venturer, stockholder, director, officer, trustee, principal,
agent, servant, employee consultant or in any other capacity whatever, directly
or indirectly, solicit orders from, sell, or render services to any customer
within the United States, its territories and possessions, with respect to any
product or service competitive with any product or service sold or developed by
Employer or any subsidiary or affiliated corporation at any time during
employment, nor shall Employee directly or indirectly aid or assist any other
person, firm, or corporation to do any of the aforesaid acts. In addition, for
a period of one year after termination of employment for any reason, Employee
shall not, in any of the aforesaid capacities, directly or indirectly do or
participate in business with any suppliers of Employer concerning any of the
products which have been, or are being, or are planned to be manufactured for or
supplied to Employer by such supplier at the time of Employee's termination.
During employment and for a further period of one year beginning on the
termination of such Employment under any circumstances; hereunder Employee
shall not, as a proprietor, partner, joint venturer, stockholder, director,
officer, trustee, principal, agent, servant, employee, consultant or any other
capacity whatever, directly or indirectly, (i) engage in, or be financially
interested in any business operating within the United States, and any other
country in which Employer conducts substantial business, which is competitive
with business either, engaged-in or contemplated, by Employer as of the date
Employee's termination from employment except for ownership in less than one
percent of any publically traded stock, or (ii) solicit or induce any officer,
salesman, or other employee of Employer or any subsidiary or affiliated
corporation, for any employment in a line of business to any conducted by
Employer, nor shall Employee directly or indirectly aid or assist any other
person, firm, or corporation to do any of the aforesaid acts.
(d) The provision of Section VII (b) and Section VII (c) above will be
limited to a period of six months if the Employee's employment with Employer is
less than one year.
(e) Employee acknowledges that, as an executive of Employee, he will
become familiar with the affairs, customers and other Confidential Information
of Employer. Employee acknowledges that his compliance with the provisions of
this Agreement and, in particular, this Section is necessary to protect the
goodwill and other proprietary interests of Employer, that their enforcement
will not significantly impair the ability of Employee to earn a livelihood and
that, but for the covenants entered into hereunder, Employer would not enter
into this Agreement with Employee. Employee acknowledges that his breach of any
of the provisions of this Section will result in irreparable and continuing
damage to the business of Employer for which there will be no adequate remedy at
law and agrees that in the event of any such breach, Employer and its successors
and assigns shall be entitled to injunctive relief and to such other and further
relief as may be proper.
(f) The parties hereto hereby acknowledge that, in addition to any other
remedies the Company may have under paragraph (d) of this Section, the Company
shall have the right and remedy to require Employee to account for and pay over
to the Company all compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by Employee as the
result of any transactions constituting a breach of this Section VII or Section
VIII below, and Employee hereby agrees to account for and pay over such Benefits
to the Company.
(g) Each of the rights and remedies enumerated above shall be independent
of the other and shall be severally enforceable. All such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
(h) If any provision contained in this Section VII, or Section VIII below,
is hereafter construed to
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be invalid or unenforceable, the same shall not affect the remainder of the
covenants with shall be give full effect, without regard to the invalid
portions.
(i) If any provision contained in this Section VII, or Section VIII below,
is found to be unenforceable by reason of the extent, duration or scope thereof,
or otherwise, then the court making such determination shall have the right to
reduce or scope, or other provision, and in its reduced form any such
restriction shall thereafter be enforceable as contemplated hereby.
(j) It is the intent of the parties hereto that the covenants contained in
this Section VII, or Section VIII below shall be enforced to the fullest extent
under the laws and public policies of each jurisdiction in which enforcement is
sought (Employee acknowledges that said restrictions are reasonably necessary
for the protection of the Company). Accordingly, it is hereby agreed that if
any of the provisions of this Section VII, or Section VIII below, shall be
adjudicated to be invalid or unenforceable for any reason whatsoever, said
provision shall be (only with respect to the operation thereof in the particular
jurisdiction in which such adjudication is made) construed by limiting and
reducing it so as to be enforceable to the extent permissible, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
Section VIII
Discoveries and Inventions
(a) Any discovery, invention, formula, process, improvement or idea
("Discovery" or "Discoveries"), whether or not patentable, relating to or useful
in the business of Employer and wholly or partially conceived, made or learned
by Employee during the period of Employment shall be the sole and exclusive
property of Employer. Employee shall disclose any Discovery to Employer
promptly and shall upon request, assist Employer in obtaining and assigning to
it all rights, title and interest in any United States or foreign patent on any
Discovery.
(b) If any Discovery is described in a patent application or is disclosed
to third parties, directly or indirectly, by Employee within two years
following termination of his employment with the Company, it is to be presumed
that the Discovery was conceived or made during the period of Employee's
employment by the Company.
(c) Employee will not assert rights to any Discovery as having been
made or acquired by him prior to the date of this Agreement, except for
Discoveries, if any, disclosed to the Company in writing prior to the date
hereof.
Section IX
Indemnification
Employee agrees to indemnify and hold harmless Employer and its successors
and assigns against any loss, cost, liability or expense incurred by any of them
(including, without limitation, reasonable attorney's fees and costs of suit) by
reason of breach or nonfulfillment by Employee of any provision of this
Agreement
Section X
Arbitration
Any differences, claims, or matters in dispute arising between the parties
out of this Agreement or connected with this Agreement shall be submitted by
them to arbitration the city of employment when the dispute arises by the
American Arbitration Association or its successor, and the determination of the
American
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Arbitration Association or its successor, and the determination of the
American Arbitration Association or its successor shall be final and
absolute. The arbitrator shall be governed by the rules and regulations of
the American Arbitration Association or its successor, and the pertinent
provisions of the laws of the applicable State relating to arbitration. The
decision of the arbitrator may be entered as a judgement in any court of the
State of California or elsewhere.
Section XI
Provisions of General Application
(a) Employee warrants and represents that (i) he is in good health and not
suffering from any impairment to his general well being, (ii) the execution of
this Agreement and discharge of Employee's obligations hereunder does not and
will not constitute a breach of or default under (A) any employment agreement or
non-competition agreement which would affect the Employee's employment
hereunder, or (B) any other contract, agreement, or understanding between
Employee and any other party or parties, and (iii) Employee has ideas,
information and know-how relating to the type of business conducted by Employer,
and Employee's disclosure of such ideas, information and know-how to Employer
will not conflict with or violate the rights of any third party or parties.
Employee, however, does not agree to disclose nor will Employer disclose any
confidential information, if any, of Employee's former employer(s).
(b) This Agreement contains the entire agreement of the parties relating
to the subject matter hereof. This Agreement supersedes and is in lieu of any
and all other employment arrangements or understandings between Employee and
Employer.
(c) Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been effectively given for all
purposes (i) if delivered personally, upon delivery, or (ii) if mailed, upon
deposit in the United States mail, registered or certified mail, postage
prepaid, addressed to Employee's residence (as last known to Employer), in the
case of Employee, or to the principal office of Employer, in the case of
Employer. Either party may change the address at which such party is to receive
notice by notice to the other party.
(d) Any waiver, change, modification, extension or discharge in connection
with this Agreement must be in writing and signed by the party to be bound
thereby. The waiver by Employer of a breach by Employee of, or failure of
Employee to comply with, any provision of this Agreement shall not be construed
as, or constitute, a continuing waiver of, or a waiver of any breach of, or
failure to comply with any provision of this Agreement.
(e) Employer may sell, assign and transfer all or part of its rights under
this Agreement to any Affiliates of Employer or any purchaser of Employer or
successor to the business or assets of Employer, provided, however, that such
purchaser or successor assumes the obligations of Employer hereunder. This
Agreement is personal to Employee, and Employee may not sell, assign, pledge or
otherwise transfer any of these rights under this Agreement.
(f) All provisions of this Agreement are intended to be interpreted and
construed in a manner making such provisions valid, legal and enforceable. In
the event any provision of this Agreement or portion thereof is found to be
wholly or partially invalid, illegal or unenforceable in any judicial
proceeding, such provision shall be deemed to be modified or restricted to the
extent necessary to make such provision valid, legal and enforceable. In the
event such provision or portion thereof cannot be so modified or restricted,
such provision or portion thereof shall be deemed to be excised from this
Agreement, and the validity, legality and enforceability of the remainder of
this Agreement shall not be affected or impaired in any manner.
(g) Confidential Information shall constitute a "Trade Secret" as defined
and subject to protection by Employer, under the Uniform Trade Secrets Act.
This Agreement is entered into in the State of California and shall be governed
by and construed in accordance with the internal laws and decisions of the State
of
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California.
IN WITNESS WHEREOF, Employer and Employee have executed this Agreement as
of the date first above written.
INTELLICELL CORP.
"Employer"
By /s/ Xxxxx Xxxx /s/ Xxxxxxx Xxxxx
------------------------------------- ----------------------------------
Xxxxx X. Xxxx, CFO Xxxxxxx X. Xxxxx
"Employee"
By /s/ Xxx Xxxxxx
-------------------------------------
Xxx Xxxxx, Chairman, President
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